The effect of the Internet on commercial bank profitability: Global bank-level panel data evidence

The Internet has changed every aspect of economic life. Much research has studied whether the Internet affects cross-border trade, service trade, foreign direct investment, economic growth and inflation. In addition to these studies, our paper analyzed the effect of the Internet on bank profitability. A bank profitability equation is estimated by using global bank-level panel data of 58 countries from 1996 to 2008. The use of the Internet turned out to improve bank profitability after controlling for total assets, GDP growth rate, net interest margin, number of employees, equity ratio and loan-loss reserves.